Bank Mutual Corporation Reports First Quarter Earnings Increase.Business Editors MILWAUKEE--(BUSINESS WIRE)--April 17, 2002 Bank Mutual Corporation (Nasdaq:BKMU) reported a substantial increase in earnings for the first quarter of 2002 as compared to the first quarter of 2001. Net income was $6.3 million or $0.29 diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the first quarter ended March 31, 2002, a 31.8% increase, as compared to $4.8 million or $0.22 diluted earnings per share for the first quarter of 2001. Earnings increased as a result of increased net interest margins, the elimination of the goodwill amortization and continued gains from the sales of loans. "We are very pleased with the increased earnings for the first quarter of 2002. This increase fits well within our long range plan of increased profitability and growth", stated Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. T. Crowley Crowley (krou`lē), city (1990 pop. 13,983), seat of Acadia parish, SW La.; inc. 1888. It is a shipping, milling, and storage center for a large rice-growing area and has a rice experiment station. Oil and natural gas wells are located nearby. , Jr. Chairman and Chief Executive Officer of Bank Mutual Corporation. The comparison of results between the 2002 and 2001 quarters is substantially affected by changes in accounting rules relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the amortization of goodwill resulting from prior acquisitions. As a result of those changes, Bank Mutual no longer amortizes the goodwill. However, it must periodically test that goodwill for impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. . These new accounting rules eliminated $775,000 in amortization expense during the first quarter of 2002, as compared to the first quarter of 2001. Fixed rate mortgage loan originations The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. remained strong early in the first quarter of 2002. However, in the latter part of the first quarter, market interest rates began to increase and fixed rate mortgage loan originations decreased. As a result of the increased market interest rates, adjustable rate mortgage This article is about the US mortgage type. For an international perspective, see Variable rate mortgage. An adjustable rate mortgage (ARM) is a mortgage loan where the interest rate on the note is periodically adjusted based on an index. loans became more popular with consumers. Mortgage loan originations and purchases for the first quarter of 2002 were $129.0 million as compared to $97.2 million in the first quarter of 2001. Mortgage loan sales were $64.0 million in the first quarter of 2002 as compared to $38.3 million for the same period in 2001. Mortgage loan sales were the major contributor to the $28.0 million decrease in the mortgage loan portfolio. Commercial business and consumer loan originations continued to be strong in the first quarter of 2002. Commercial business and consumer loan originations in the first quarter of 2002 were $60.3 million as compared to $52.8 million for the same period in 2001. The commercial business loan portfolio increased $2.6 million primarily as a result of existing customers increasing their usage of existing lines of credit and from new originations. The consumer loan portfolio decreased $10.0 million, which reflected the continuing pattern of consumers refinancing Refinancing An extension and/or increase in amount of existing debt. their first mortgage loans and consolidating their other consumer debt. Assets at March 31, 2002 were $2.85 billion as compared to $2.91 billion at December December: see month. 31, 2001. Deposits decreased $10.5 million in the first quarter of 2002 as a result of consumers re-investing their money in alternate alternate /al·ter·nate/ (awl´ter-nit) 1. following in turns. 2. pertaining to every other one in a series. 3. occurring in place of another; acting as a substitute. investments and seasonality. Borrowings decreased $46.7 million in the first quarter of 2002 to $418.7 million at March 31, 2002 as compared to $465.4 million at December 31, 2001. Bank Mutual's asset quality continues to be good. Non-performing loans A non-performing loan is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 3 months, but this can depend on the contract terms. to total loans at March 31, 2002 were 0.21% and non-performing assets to total assets were 0.16%. Although these ratios have increased slightly in the first quarter, they continue to compare favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. to other financial institutions and are an indicator Indicator Anything used to predict future financial or economic trends. Notes: In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices. of the effective underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. standards that are used by Bank Mutual. The net interest margin for the first quarter of 2002 was 2.90% as compared to 2.69% for the first quarter in 2001. The increase in the net interest margin was primarily the result of maturing higher interest rate deposits being reinvested at lower interest rates. This decrease in expense was partially offset by the investment of our excess cash in mortgage related securities, which historically yield less than loans. Bank Mutual continued to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. its shares in the first quarter of 2002. As of March 31, 2002, 369,500 shares have been repurchased at an average price of $14.92 per share. Bank Mutual is authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: to repurchase up to 1,449,303 shares for use in employee stock benefit plans. Book value per share was $13.75 and tangible Possessing a physical form that can be touched or felt. Tangible refers to that which can be seen, weighed, measured, or apprehended by the senses. A tangible object is something that is real and substantial. An automobile is an example of tangible Personal Property. book value per share was $11.22 at March 31, 2002. Annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. return on average equity (ROE A fictitious surname used for an unknown or anonymous person or for a hypothetical person in an illustration. A lawsuit is generally named for the persons who are parties to it. ) for the first quarter of 2002 was 8.24% as compared to 6.65% for the same period last year. The annualized return on average assets (ROA ROA See: Return on assets ROA See: Right of accumulation ROA See return on assets (ROA). ) for the first quarter of 2002 was 0.89% as compared to 0.69% for the first quarter of 2001. Further information regarding Bank Mutual's assets, liabilities and operations is attached. Bank Mutual Corporation is the fourth largest financial institution holding company headquartered in the state of Wisconsin Wisconsin, state, United States Wisconsin (wĭskŏn`sən, –sĭn), upper midwestern state of the United States. It is bounded by Lake Superior and the Upper Peninsula of Michigan, from which it is divided by the Menominee and its stock is quoted on The Nasdaq Stock Market Nasdaq stock market The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies. (R) under the symbol "BKMU". Its two subsidiary banks, Mutual Savings Bank Mutual savings bank A state-chartered savings bank which is owned by its depositors and managed by a fiduciary board of trustees. and First Northern Savings Bank savings bank, financial institution that, until recently, performed only the following functions: receiving savings deposits of individuals, investing them, and providing a modest return to its depositors in the form of interest. , operate 69 offices in the state of Wisconsin and one office in Minnesota Minnesota, state, United States Minnesota (mĭn'ĭsō`tə), upper midwestern state of the United States. It is bordered by Lake Superior and Wisconsin (E), Iowa (S), South Dakota and North Dakota (W), and the Canadian provinces . Outlook (The following are forward looking statements; see "Cautionary Statements" below.) Bank Mutual's management has identified a number of factors, which may affect the company's operations and results in 2002. They are as follows: -- Mutual Savings Bank and First Northern Savings Bank will continue to operate in 2002 as separate operating subsidiaries and, therefore, we do not expect significant cost savings from combined operations during 2002. Expense growth is expected to reflect general economic conditions. -- Bank Mutual anticipates it will combine its savings bank subsidiaries in 2003. This schedule remains subject to change and refinement. Not all of the costs of the combination have yet been determined. However, some of the preliminary cost estimates are as follows: marketing costs, which include signage changes, $1.7 million; and systems upgrades, $1.8 million. A majority of these estimated expenditures would be capitalized and depreciated over their expected useful lives. -- 2002 may provide a flat to increasing interest rate environment. If that is the case, there are a number of effects that Bank Mutual, like other financial institutions, could experience. -- Mortgage loan sales could decrease as fixed rate mortgage loans become less attractive to consumers thereby reducing the gains on sales of loans. Bank Mutual sells most of its fixed rate mortgage loans to the secondary market. -- If mortgage loan refinancings decrease, fee income could be significantly less than in 2001. -- Bank Mutual may further emphasize consumer loans, and commercial real estate and business loans, which can present higher risks than residential mortgages. -- Bank Mutual has implemented new accounting standards that significantly altered the recognition of goodwill expense. For fiscal years beginning after December 15, 2001, goodwill is no longer amortized over a stated period of time but rather it remains on the statement of financial condition and is periodically tested for impairment. If goodwill is found to be impaired, the impaired amount will be expensed to current operations. Other identifiable intangible assets continue to be expensed over their useful lives. -- The national and local economy has generally experienced significant challenges and disruptions in recent periods. The general slowdown in the economy has included a higher level of unemployment. Among other things, the slowdown and world events could affect the ability of individual and business borrowers to repay their obligations to Bank Mutual or otherwise affect Bank Mutual's operations and financial condition. Cautionary Statements The discussions in this news release, which are not historical statements, contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risk and uncertainties. Statements which are not historical statements include those under "Outlook" and those in the future tense future tense n. A verb tense expressing future time. Noun 1. future tense - a verb tense that expresses actions or states in the future future or which use terms such as "believe," "expect," and "anticipate." Bank Mutual's actual future results could differ in important and material ways from those discussed. Many factors could cause or contribute to such differences. These factors include changing interest rates, changes in demand for loans or other services, competition from other institutions, the results of our lending activities and loan loss experience, the need to continue to integrate our operations, general economic and political developments, those items discussed under "Outlook," and other factors discussed in our filings with the Securities and Exchange Commission.
BANK MUTUAL CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
March 31, December 31,
2002 2001
------------------- ------------------
(In Thousands)
Assets
Cash and due from banks $ 34,040 $ 41,574
Federal funds sold 145,000 175,000
Interst-earning deposits 38,622 35,338
------------------- ------------------
Cash and cash equivalents 217,662 251,912
Securities available-for-sale,
at fair value:
Investment securities 83,267 93,059
Mortgage-related securities 561,664 521,084
Loans held for sale 17,666 32,321
Loans receivable, net 1,791,623 1,831,155
Goodwill 52,570 52,570
Other intangible assets 6,230 6,396
Other assets 119,632 117,293
------------------- ------------------
$ 2,850,314 $ 2,905,790
=================== ==================
Liabilities and Shareholders' Equity
Liabilities:
Deposits $ 2,079,981 $ 2,090,440
Borrowings 418,663 465,360
Advance payments by borrowers
for taxes and insurance 12,702 3,499
Other liabilities 32,432 42,393
------------------- ------------------
2,543,778 2,601,692
Shareholders' equity:
Preferred stock - $.01 par value:
Authorized - 10,000,000
shares in 2002 and 2001
Issued and outstanding -
none in 2002 and 2001 - -
Common stock - $.01 per value:
Authorized - 100,000,000
shares in 2002 and 2001
Issued - 22,341,665 shares
in 2002 and 2001
Outstanding - 22,301,165
in 2002 and 22,337,165 in 2001 223 223
Additional paid-in capital 108,233 108,043
Retained earnings 207,217 201,777
Unearned ESOP shares (7,553) (7,850)
Accumulated other
comprehensive income 2,902 6,018
Unearned deferred compensation (3,826) (4,047)
Treasury stock - 40,500
in 2002; 4,500 in 2001 (660) (66)
------------------- ------------------
306,536 304,098
------------------- ------------------
$ 2,850,314 $ 2,905,790
=================== ==================
BANK MUTUAL CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31,
2002 2001
--------------- ----------------
(In Thousands)
Interest income:
Loans $ 32,842 $ 38,707
Investment securities 1,462 2,128
Mortgage-related securities 7,940 7,772
Interest-earning deposits 723 687
--------------- ----------------
Total interest income 42,967 49,294
Interest expense:
Deposits 17,497 22,973
Borrowings 6,057 8,631
Advance payment by borrowers
for taxes and insurance 24 36
--------------- ----------------
Total interest expense 23,578 31,640
--------------- ----------------
Net interest income 19,389 17,654
Provision for loan losses 15 101
--------------- ----------------
Net interest income after provision
for loan losses 19,374 17,553
Noninterest income:
Service charges on deposits 1,029 1,021
Brokerage and insurance commissions 813 522
Loan related fees 47 355
Gain on sales of loans 953 399
Other 1,001 1,052
--------------- ----------------
Total noninterest income 3,843 3,349
Noninterest expenses:
Compensation, payroll taxes and other
employee benefits 7,917 6,780
Occupancy and equipment 2,591 2,700
Amortization of goodwill - 775
Amortization of other intangible assets 165 165
Other 2,938 2,772
--------------- ----------------
Total noninterest expenses 13,611 13,192
--------------- ----------------
Income before income taxes 9,606 7,710
Income taxes 3,275 2,907
--------------- ----------------
Net income $ 6,331 $ 4,803
=============== ================
Per share data:
Earnings per share-basic $ 0.30 $ 0.22
Earnings per share-diluted $ 0.29 $ 0.22
Cash dividends paid $ 0.08 $ 0.07
Bank Mutual Corporation and Subsidiaries
Supplemental Financial Information (Unaudited)
(Dollars in thousands except per share amounts and ratios)
Originations and Purchases:
--------------------------- During the quarter ended March 31,
2002 2001
--------------- ----------------
Originations:
Mortgage loans $ 125,980 $ 96,167
Consumer loans 51,106 48,790
Commercial business loans 9,160 4,005
--------------- ----------------
Total loan originations $ 186,246 $ 148,962
Purchases:
Mortgage loans 3,024 991
--------------- ----------------
Total loan purchases 3,024 991
--------------- ----------------
Total loans originated and purchased $ 189,270 $ 149,953
=============== ================
Loan Sales $ 64,005 $ 38,264
=============== ================
Loan Portfolio Analysis
----------------------- March 31, December 31,
2002 2001
--------------- ----------------
Mortgage loans:
One-to-four family $ 955,332 $ 992,126
Multi-family 128,847 131,925
Commercial real estate 170,793 165,556
Construction and development 132,251 125,611
--------------- ----------------
Total mortgage loans 1,387,223 1,415,218
Consumer loans 405,298 415,328
Commercial business loans 63,570 60,932
--------------- ----------------
Total loans receivable 1,856,091 1,891,478
Deductions to gross loans 64,468 60,323
--------------- ----------------
Total loans receivable, net $ 1,791,623 $ 1,831,155
=============== ================
Asset Quality Ratios
-------------------- March 31, December 31,
2002 2001
--------------- ----------------
Non-performing mortgage loans $ 1,783 $ 1,814
Non-performing consumer loans 464 444
Non-performing commercial business loans 513 346
Accruing loans delinquent 90 days or more 1,035 936
--------------- ----------------
Total non-performing loans $ 3,795 $ 3,540
=============== ================
Total non-performing assets $ 4,578 $ 3,923
=============== ================
Non-performing loans to
loans receivable, net 0.21% 0.19%
Non-performing assets to total assets 0.16% 0.14%
Allowance for loan losses to
non-performing loans 324.22% 345.90%
Allowance for loan losses to
non-performing assets 268.76% 312.13%
Allowance for loan losses to total loans 0.69% 0.67%
Net recoveries (charge-offs) $ 44 $ (716)
Net recoveries (charge-offs) to
avg loans (annualized for qtr) 0.01% -0.04%
Allowance for loan losses $ 12,304 $ 12,245
Bank Mutual Corporation and Subsidiaries
Supplemental Financial Information (Unaudited)
(Dollars in thousands except per share amounts and ratios)
Operating Ratios (annualized)
----------------------------- Three months ended March 31,
2002 2001
--------------- ----------------
Net interest margin 2.90% 2.69%
Return on average assets 0.89% 0.69%
Return on average assets
(excluding amortization of goodwill) 0.89% 0.80%
Return on average shareholders' equity 8.24% 6.65%
Return on average shareholders' equity
(excluding amortization of goodwill) 8.24% 7.72%
Efficiency ratio 58.59% 62.81%
Efficiency ratio (excluding
amortization of goodwill) 58.59% 59.12%
Non-interest expense as a percent
of average assets 1.90% 1.89%
Non-interest expense (excluding
amortization of goodwill)
as a percent of average assets 1.90% 1.78%
Other Information Three months ended March 31,
----------------- 2002 2001
--------------- ----------------
Average earning assets $ 2,676,798 $ 2,628,967
Average assets $ 2,859,352 $ 2,796,914
Average interest bearing liabilities $ 2,447,619 $ 2,396,973
Average shareholders' equity $ 307,242 $ 288,871
Weighted average number of shares
outstanding;
-used in basic earnings per share 21,286,491 21,450,050
-used in diluted earnings per share 21,604,502 21,450,050
Amortization of goodwill and other
intangible assets less applicable
deferred taxes for the period $ 98 $ 873
March 31, December 31,
2002 2001
--------------- ----------------
Number of shares outstanding
(net of treasury shares) 22,301,165 22,337,165
Goodwill and other intangible
assets less applicable deferred taxes $ 56,302 $ 56,361
Book value per share $ 13.75 $ 13.61
Tangible book value per share $ 11.22 $ 11.09
Weighted Average Net Interest Rate Spread
-----------------------------------------
At March 31, At December 31,
2002 2001
--------------- ----------------
Yield on loans 6.99% 7.14%
Yield on investments 4.91% 4.96%
Combined yield on loans and investments 6.31% 6.46%
Cost of deposits 3.23% 3.66%
Cost of borrowings 5.36% 5.35%
Total cost of funds 3.60% 3.98%
Net interest rate spread 2.71% 2.48%
|
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion